Search for alternative investments is on for ACU investors as it underperforms broader market
14 Dec, 201813 min read
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ACME UNITED CORP trailed the broader market today. It returned -0.21% to close at 14.35. During the last week it returned -4.65% and saw a maximum drawdown of -7.91% before bouncing back.
ACU is currently in a down trend. The current bearish signal has generated a profit of +34.77% for investors in the last three months.
ACU has been underperforming the SP500 index in recent time, after having outperformed till 27 Apr, 2017. Over the last 2 years 11 months and 10 days, ACU underperformed the SP500 index on 49% days. Which indicates that on days ACU underperforms the SP500 index, it's performance is marginally worse than on the days it outperforms the SP500 index.
During the last three months ACU was mostly loss making and delivered on average -0.62% per day. It's best return during this period (of +8.42%) was on Monday, 26 Nov, 2018. While it's worst loss in the same period (of -10.93%) was on Friday, 19 Oct, 2018. There was initially a bearish trend during this period which started on 15 Oct, 2018 and went on till 24 Oct, 2018. The trend delivered -25.49% losses to investors. This was followed by a bullish trend that started on 30 Oct, 2018 and ended on 2 Nov, 2018. This bullish trend delivered +5.04% to investors.
On monthly basis, ACU delivered losses in more months over the last year, than profits. ACU delivered profits less regularly than SP500 index. ACU was also a more risky investment than SP500 index as it's worst month in the last year, Oct 2018, returned -19.41% compared to -7.28% returned by SP500 index in Oct 2018. ACU had a longer winning streak of losing months than SP500 index. It went down in 4 straight months (from Sep 2018 to Dec 2018) during which period it delivered -40.47%. It is interesting to note that both ACU and SP500 index significantly outperform during months when quarterly/annual results are announced.
"The financial markets generally are unpredictable. So that one has to have different scenarios... The idea that you can actually predict what's going to happen contradicts my way of looking at the market.
ACU is becoming more volatile overall. In comparison, the SP500 index is seeing a rise in volatility. During the last three months, there was a significant surge in ACU's volatility from 18 Sep, 2018 to 25 Oct, 2018. While there was a significant surge in the SP500 index's volatility from 25 Sep, 2018 to 29 Oct, 2018.
Advanced/professional short-term investors should note that ACU has negative skewness in it's return distribution. This indicates that investors may need to stay invested through long periods of drawdown before expecting a recovery.
SP500 index has more chance of extreme outcomes than ACU. Therefore, SP500 must receive a lower allocation than ACU in your portfolio. SP500 index usually has shorter drawdown period than ACU.
On a general note (since you are interested in ACU), three mid cap instruments that deserve special mention are TWTR, LULU and AMD. They have all outperformed the market and must be closely watched for investment opportunities.
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